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Stable macro policies since early 2011 have led to lower volatility in interest rates, exchange rates, and inflation. Sustaining a broadly steady backdrop raises the chances of a banking-sector recovery. However, state-led reforms have been slow; in part because the authorities probably fear exacerbating problems in an already fragile economy.
The Outlook is Stable, however, because the banks' ratings in the single 'B' category already factor in such vulnerabilities, and in light of the Vietnamese sovereign's Stable Outlook.
Fitch forecasts Viet Nam’s GDP growth to rise modestly to around 5.5% in 2014-2015 (2013: 5.0%) - low relative to the country's record over the last decade. Efforts to spur domestic demand have not been effective as banks and borrowers are wary of an uncertain operating environment. Reported loan growth was just 6% in the year to August 2013 (2012: 9%).
Fitch expects any recovery in the banking system to be gradual, depending on the pace and effectiveness of reforms, and regulatory discipline.
